Acquisitions in Asian Rubber Industry proves to be a Good Sign for Economic Growth

Acquisition is one of the most important business developments that contribute to the growth of the business. Acquisitions help the business grow faster by expanding in to other markets which can increase its geographical presence. It also enables the company to introduce new product lines of the acquired company into the business and increase the market share.

Some Notable Acquisitions:

• In September 2015, Chemchina have signed an agreement to acquire major stake in Rosneft’s Far-East Petrochemical Co (FEPCO) project.
• Voltage IP Limited whichsigned an agreement to acquire Malaysian rubber industry manufacturing business KLE Products Sdn Bhd.
• JK Tyre has signed an agreement withBK Birla's Kesoram Tyre manufacturing unit where both the companies are tyre manufacturers.

Tyre industry is the major end user of rubber. With this acquisition, JK Tyre will strengthen its position in the industry and Kesoram will be able to reduce its debt as it is facing interest burden since last four years. In the similar way, many acquisitions have taken place in rubber industry which would strengthen the acquiring company as well as acquired companyfinancial position in the country. The GDP of any country depends on the company’stotal production over a period of time and itshows positive impact on the economy.

Rubber industry contributes to the significant amount to GDP in Asian countries due to high economic growth in developing nations. China is the largest consumer of rubber in Asia as the economic growth in the country is at a faster pace. China continues to be the largest consumer of natural rubber in the world and accounting for nearly 36% of world consumption of natural rubber and uses 80% of its consumption for tire manufacturing purposes. Followed by China, India had enormous growth in rubber consumption. In Singapore, major expansion projectsare carried out such as ExxonMobil production capacity increase by 1, 40,000 tons per year and Lanxess investment of €200m opening a rubber manufacturing plant which shows huge growth opportunities in the country. Apart from these, the increase in demand from end user industries such as automotive tires, footwear and construction sector from developing countries shows significant growth in the future that in turn increase the growth of rubber industry.

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